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2008 Supreme(P&H) 2100
PUNJAB AND HARYANA HIGH COURT
Vinod K. Sharma, J.
Gurdip Singh and other - Petitioners
Versus
Bank of India - Respondent
CR No. 3913 of 1992.
Decided On : 12 December, 2008
For the Petitioners:Mr. Kanwaljit Singh, Sr. Advocate with Mr. G. S. Ghuman, Advocate.
For the Respondent: None.
Agricultural loans are subject to a maximum interest rate of 6 per cent per annum, and any decree granting interest beyond this limit would be considered a nullity and without jurisdiction.
Headnote:
Section 34 of the Code - Refund of Excess Interest - [AGRICULTURAL LOAN] - [Section 34 of the Code of Civil Procedure] - The court discussed the provisions of Section 34 of the Code, which allows for the grant of interest on a decree for the payment of money. The court emphasized that agricultural loans cannot be treated as commercial transactions and are therefore subject to a maximum interest rate of 6 per cent per annum. The judgment highlighted that a decree granting interest beyond 6 per cent per annum for agricultural loans would be considered a nullity and without jurisdiction. The court also clarified that while the executing court cannot generally go behind the decree, it can do so in cases where the decree is a nullity or without jurisdiction.
Fact of the Case:
The petitioners took a loan from a bank, which was decreed in favor of the bank. They subsequently sought a refund of excess interest paid, arguing that the interest granted was beyond the permissible limit for agricultural loans.
Finding of the Court:
The court found that the decree granting interest beyond 6 per cent per annum for agricultural loans was a nullity and without jurisdiction. It allowed the revision, set aside the impugned order, and sent the case back to the executing court for determination of any excess amount to be refunded to the petitioners.
Issues: The main issue was whether the interest granted on the decree for agricultural loans, beyond the permissible limit of 6 per cent per annum, was valid or whether it constituted a nullity and without jurisdiction.
Ratio Decidendi: The court held that agricultural loans cannot be treated as commercial transactions and are subject to a maximum interest rate of 6 per cent per annum. It emphasized that any decree granting interest beyond this limit would be considered a nullity and without jurisdiction, allowing the executing court to review and determine the refund of any excess amount paid.
Final Decision: The revision was allowed, the impugned order was set aside, and the case was sent back to the executing court for further determination.
Vinod K. Sharma, J. (Oral) - This revision is directed against the order dated 12.11.1991 passed by the learned Sub Judge First Class, Jalandhar vide which application moved by the petitioners under Section 47 of the Code of Civil Procedure (for short the Code) for refund of money paid in excess of amount due has been ordered to be dismissed.
2. The petitioners took a loan of Rs. 13,000/- from the Bank of India, Jalandhar Branch in the year 1973-74 as crop loan as well as for the purchase of equipments. Judgement debtors No. 2 and 3 stood sureties for repayment of loan, for the petitioners.
3. As the petitioners failed to repay the loan a suit was filed for recovery which was decreed in favour of the Bank on 9.6.1982 for a sum of Rs. 23,841.06 P. with future interest at the rate of 13.35 per cent per annum from the date of suit till realization.
4. Execution application was filed in which amount was paid.
5. The petitioners thereafter moved an application for refund of excess amount on the plea that the order of the court granting interest beyond 6 per cent per annum after the passing of the decree was nullity and without jurisdiction as the court could only grant interest at the rate of 6 per cent per annum in case of agricultural loan as it could not be said to be commercial transaction to attract the proviso to Section 34 of the Code.
6. The learned trial court rejected the plea raised by the petitioners by observing that it was not open to the executing Court to go behind the decree and adjudicate as to whether interest granted was legal or not.
7. This court in the case of Jaswant Singh v. State Bank of India, (2004-1) PLR 347 has been pleased to lay down that Executing Court cannot go behind the decree.
8. Mr. Kanwaljit Singh, learned senior counsel appearing on behalf of the petitioners, however, contends that the decree granting interest over and above 6 per cent per annum from the date of passing of the decree would be nullity, thus, without jurisdiction as under Section 34 of the Code the court can only grant interest at the rate 6 per cent and not more than that unless the transaction is commercial so as to be covered under proviso to Section 34 of the Code of Civil Procedure.
9. In support of this contention learned senior counsel has placed reliance on the judgment of this Court in the case of Krishan Lal v. State Bank of Patiala and Ors., 1990(1) PLR 132 and Siri Chand and another v. Central Bank of India, Yamunanagar, (1988-1) PLR 473, wherein this Court has been pleased to lay down as under :-
"4. The provisions of Section 34 of the Code are not procedural in nature and in fact confer a jurisdiction on the Court, which, but for that provision would not be there. So was held by the Supreme Court in Thawardas Pherumal and another v. Union of India, and by a Division Bench of this Court in State of Punjab v. Surinder Nath Goel. It is, therefore, obvious that the Court has the jurisdiction to grant interest after the filing of the suit only in accordance with the provisions of Section 34 of the Code and any order made in contravention therof would be without jurisdiction. Once it is held any judgment or decree passed in contravention of Section 34 of the Code would be without jurisdiction, it would be open to challenge even in execution proceedings, being a nullity and void decree. A similar view expressed by a Division Bench of Orissa High Court in V. Radhreenaryan Murty Raj. v. Epari Venugoplan and P.D. Desai, C.J. In M/s Laxmi Furniture and Saw Mills, Simla v. Himachal Pradesh Financial Corporation, Simla".
Section 34 of the Code of Civil Procedure reads as under :-
"34. Interest - (1) Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the
